An indifference curve shows,Group of answer choicesexpenditure bundles that the consumer can afford given the prices.consumption bundles that give the consumer the same level of satisfactionconsumption bundles that give the consumer different level of satisfaction.expenditure bundles that the consumer is least willing to make.

Indifference curves illustrateGroup of answer choicesa firm's profits.the prices of two goods.a consumer's preferences.a consumer's budget.

There is a general procedure for constructing indifference curves given a “verbal” description of the preferences. First plop your pencil down on the graph at some consumption bundle (x1, x2). Now think about giving a little more of good 1, Δx1, to the consumer, moving him to (x1 +Δx1, x2). Now ask yourself how would you have to change the consumption of x2 to make the consumer indifferent to the original consumption point? Call this change Δx2. Ask yourself the question “For a given change in good 1, how does good 2 have to change to make the consumer just indifferent between (x1 + Δx1, x2 + Δx2) and (x1, x2)?” Once you have determined this movement at one consumption bundle you have drawn a piece of the indifference curve. Now try it at another bundle, and so on, until you develop a clear picture of the overall shape of the indifference curves.There is a general procedure for constructing indifference curves given a “verbal” description of the preferences. First plop your pencil down on the graph at some consumption bundle (x1, x2). Now think about giving a little more of good 1, Δx1, to the consumer, moving him to (x1 +Δx1, x2). Now ask yourself how would you have to change the consumption of x2 to make the consumer indifferent to the original consumption point? Call this change Δx2. Ask yourself the question “For a given change in good 1, how does good 2 have to change to make the consumer just indifferent between (x1 + Δx1, x2 + Δx2) and (x1, x2)?” Once you have determined this movement at one consumption bundle you have drawn a piece of the indifference curve. Now try it at another bundle, and so on, until you develop a clear picture of the overall shape of the indifference curves.

Compare and contrast the marginal utility approach with the indifference curve approach inunderstanding consumer behaviour.

What is the purpose of an indifference curve in the Ordinal Utility Theory?To measure utility in utils.To show all combinations of goods that give the consumer equal satisfaction.To represent the law of diminishing marginal utility.To measure the total utility of a good

The ______ bundle of goods and services occurs where the indifference curve is tangent to the budget line.Multiple choice question.utility-maximizingprofit maximizingmost affordablecost minimizing